Business
With debt of Rs 2.82L cr, incoming govt faces daunting task in Punjab
With a whopping public debt of Rs 2.82 lakh crore, the incoming government in one of the most fiscally stressed states, Punjab will be faced with the daunting task to usher in much-needed economic reforms as a major component of government earning and borrowing is meant for servicing debt rather than capital expenditure.
Twenty per cent of the annual budget is being spent only to pay the interest on the loans.
As per the latest findings of the Comptroller and Auditor General of India, the state’s financial crisis is set to worsen with the debt likely to reach Rs 3.73 lakh crore by 2024-25.
Government officials told IANS that the state’s debt has increased by Rs 1 lakh crore in the past five years under the current Congress government now led by Chief Minister Charanjit Singh Channi, largely owing to populism.
When this government took over the reins in 2017, it got the legacy of a Rs 2.08 lakh crore debt left by the decade-long rule of the Shiromani Akali Dal-BJP in the state.
An official familiar with the matter told IANS that political compulsions and populist announcements have been taking a huge toll on the state’s finances and this may surge the debt beyond the projected Rs 2.82 lakh crore.
Finance Minister Manpreet Badal in his last budget speech for this fiscal projected the total revenue receipts at Rs 95,257 crore. However, the state has never managed to achieve more than 80 per cent of its revenue target.
Also approximately 40 per cent of the state’s total estimated revenue receipts of Rs 95,257 crore for the current fiscal would go into debt servicing.
As per the budget estimates of an outlay of Rs 168,015 crore for 2021-22, the outstanding debt is likely to be Rs 273,703 crore in 2021-22, which is 45 per cent of the GSDP.
The total outstanding debt of the state as on March 31 is projected at Rs 252,880 crore, which is 42 per cent of the GSDP for 2020-21 and the outstanding debt is likely to be Rs 273,703 crore in 2021-22, which is 45 per cent of the GSDP.
Besides a major component of earnings and market borrowings go into debt servicing, the revenue goes into unproductive expenditure like disbursement of salaries, pensions and power subsidies for the farmers.
Also, say officials, the Covid-19 pandemic has caused a significant deterioration in public finances, adding to pre-existing strains. Also businesses in the state are reeling because of a sluggish economy and poor liquidity.
As per the recent memorandum by the state to the Centre for extending the Goods and Services Tax (GST) compensation, Punjab says being an agrarian economy it was deriving a significant portion of its revenue from the agriculture sector in the pre-GST era by imposition of tax on agricultural produce (mainly foodgrains).
This was realized in the form of the levy of Purchase Tax on agricultural produce at the rate of five per cent of the minimum support price (MSP) of produce collected from the purchaser of such produce.
In addition, an Infrastructure Development Fee at the rate of three per cent was also levied on purchase of foodgrains. The state collected Rs 3,094 crore in 2015-16 from the Purchase Tax and Infrastructure Development Fee alone, i.e. 16.55 per cent of its total tax revenue of Rs 18,692.89 crore during that year.
With the implementation of GST, both the Purchase Tax and Infrastructure Development Fee on foodgrains have been subsumed in the GST.
Since the GST is a destination-based tax and agricultural produce is largely exempted under it, Punjab has experienced a permanent loss of a significant portion of the state revenue.
However, the saving grace for the government is the first half of this fiscal with a hefty increase in revenue from the pre-Covid levels.
The GST revenue comprising state goods and services tax (SGST) and integrated goods and services tax from April to September of 2021 was Rs 7,851 crore, which is 67.55 per cent more than in the corresponding period of 2020, and 54 per cent more than in the pre-pandemic year of 2019-20.
But the area of concern for authorities now is ending GST compensation from the Centre on June 30, unless it is extended by the GST Council, leaving the state to fend for itself thereafter.
A report by the Group of Experts (GOE) led by noted economist Montek Singh Ahluwalia, set up by Chief Minister Amarinder Singh to revive Punjab’s economy, recommended measures like reducing average cost of government debt, banning recruitment in police and bringing pay scales of government employees on par, among others.
The panel in its report to aid medium and long-term revival strategy was categorically clear that unless measures are taken to correct the fiscal situation over the next few years, it will not be possible to achieve the objective of restoring Punjab to its pre-eminent position.
The experts suggested rationalisation of power subsidies given to farmers that is 1.9 per cent of its GDP and grew from Rs 5,670 crore in 2019-20 to Rs 7,180 in 2020-21.
Ahead of the polling for the Assembly elections on February 20, the opposition Aam Aadmi Party (AAP) had accused the previous Akali-BJP and current Congress government of plunging Punjab into debt.
“With the population of 3 crore, today every individual in Punjab has a debt of Rs 1 lakh. Every child who is born in Punjab already has a debt of 1 lakh rupees on them right after their birth,” AAP leader Raghav Chadha told the media.
SAD President Sukhbir Badal, the man known for micro poll management for his now own controlled century old party with the focus on farmers’ interests and justice for them, said Punjab and Punjabis are in a crisis.
“The Congress government did nothing for five years. It reneged on each and every promise made to the people be it complete farm loan waiver, Rs 2,500 per month unemployment allowance, jobs for each household and increase in social welfare benefits.
“It also stalled all development work but simultaneously presided over a sand and liquor mafia and looted the state exchequer. It was due to this that the state’s debt has increased by Rs 1 lakh crore in the last five years alone.”
All the parties were banking on freebies to woo the electorate.
The AAP has promised Rs 1,000 for all women, while the Congress has assured Rs 1,100 per month for needy women. The SAD-BSP alliance has promised Rs 2,000 per month to all women heads of BPL families.
Two-time Chief Minister and former Congress leader Amarinder Singh in his election campaignin stressed Punjab “needs the Centre’s support for its economic revival, which his party, the Punjab Lok Congress, in alliance with the BJP would help achieve.”
The state has no money for development, which will remain a far cry under the false promises of parties like the Congress, AAP and SAD, who were not willing to work in coordination with the Centre, he stressed.
Nice/New Delhi, June 14: India has transformed from being a consumer of global solutions to a contributor of solutions for the world, Prime Minister Narendra Modi said on Sunday.
Speaking after inaugurating the ‘Bharat Innovates 2026’ event in Nice, France, PM Modi said India’s innovation ecosystem is rapidly expanding and increasingly playing a role in addressing global challenges through technology and entrepreneurship.
“India now acts as a solution contributor rather than a solution consumer,” the Prime Minister said.
The Prime Minister further stated that India is innovating at both speed and scale, with a focus on creating sustainable solutions that benefit not only its own citizens but also the global community.
“Bharat innovates with speed and scale. Bharat innovates for a sustainable future. Bharat innovates for the whole world,” PM Modi said while addressing the innovation-focused event, jointly inaugurated with French President Emmanuel Macron.
Emphasising India’s approach towards technological development, the Prime Minister said the country’s priority is “technology for humanity” and human-centric innovation.
He added that innovation is deeply embedded in India’s culture and way of thinking. “Innovation is in India’s DNA,” Prime Minister Modi explained.
The Prime Minister also praised the growing partnership between India and France, describing it as a relationship rooted in shared values, mutual trust and common interests.
He noted that cooperation between the two countries spans a wide range of sectors, from security and strategic affairs to sustainability and innovation.
“India-France partnership covers security to sustainability,” PM Modi said.
Macron, who shared the stage with PM Modi at the event, described the Prime Minister’s presence at ‘Bharat Innovates’ as a matter of great honour for France.
He also congratulated PM Modi on completing 12 years as India’s leader and praised his role in strengthening ties between the two countries.
The ‘Bharat Innovates’ event has brought together leading startups, venture capital funds, innovators and technology leaders from India, France and several other countries.
Bengaluru, June 14: Union Finance Minister Nirmala Sitharaman on Sunday said that while Congress leader Rahul Gandhi was repeatedly criticising the country’s economic performance, “on the contrary, quarter after quarter, year after year India has been the fastest growing economy”.
Addressing the Bharatiya Janata Party’s (BJP) ‘Viksit Bharat’ event here, Union Minister Sitharaman noted that it is not the Central government, which is claiming that India is the fastest-growing economy, but the GDP numbers were indicative of this.
The International Monetary Fund (IMF) also said India was the world’s fastest growing major economy, she said.
She also added that the Lok Sabha Leader of the Opposition Rahul Gandhi keeps saying that there is a big disaster awaiting, but there is none awaiting India.
The Union Minister said that repeated criticism by the Congress leader could create a false perception among citizens about the country’s economic condition.
“The Leader of the Opposition (Rahul Gandhi) and his party try to make people believe that India is in trouble. Yet even amidst crises in West Asia and disruptions around the Strait of Hormuz, India continues to move forward,” Union Minister Sitharaman remarked.
Commenting on the impact of geopolitical tensions on fuel supplies and global trade, she said the challenges extended beyond fluctuations in crude oil and LPG prices.
“These challenges affect not only crude oil prices and LPG prices but global shipping as well. Shipping companies hesitate to send vessels through conflict zones. Insurance premiums increase because ships risk being attacked. Whether a vessel is empty or carrying crude oil, insurance costs rise significantly, and those costs ultimately have to be paid to ensure supplies reach the country,” she noted.
“Despite these global headwinds, the Narendra Modi government has ensured uninterrupted supplies of petroleum products,” she said.
Union Minister Sitharaman said the BJP’s 12-year journey under Prime Minister Modi was marked by both development and welfare.
She highlighted the reduction in multidimensional poverty, expansion of tap water connections, sanitation coverage, free LPG connections and food security programmes as the achievements of the Narendra Modi-led Union government.
“Twenty-five crore Indians have come out of multidimensional poverty. Extreme poverty has declined from 29.17 per cent in 2013-14 to about 11.28 per cent. Twelve crore household toilets have been built under rural sanitation programmes, achieving near-universal coverage,” the Union Finance Minister said.
She added that the government benefits were directly reaching the poor through the digital public infrastructure ecosystem built around the JAM trinity — Jan Dhan accounts, Aadhaar and mobile connectivity.
Union Minister Sitharaman said that India now has 58 crore Jan Dhan accounts, 144 crore Aadhaar identities and 125 crore mobile connections while UPI had become a global model for digital transactions.
She also rejected the Congress’ claims that the Centre had neglected Karnataka and cited tax devolution, grants and infrastructure investments to back her argument.
Union Minister Sitharaman said, “The Karnataka government frequently claims that the Centre is not giving the state its due share. Let us look at the facts. Tax devolution to Karnataka between 2014 and 2026 amounted to about Rs four lakh crore — five times more than the Rs 82,000 crore received in the comparable pre-2014 period.”
“Grants-in-aid to Karnataka between 2014 and 2026 stood at about Rs 2.71 lakh crore and that the state had also received more than Rs 18,000 crore under the Centre’s 50-year interest-free loan scheme,” the Union Finance Minister added.
Nice/New Delhi, June 14: Ahead of the inauguration of the Bharat Innovates Summit in Nice, Prime Minister Narendra Modi on Sunday interacted with select investors and venture capital leaders from India, France and several other countries.
The innovation-focused summit is set to be jointly launched by Prime Minister Modi and French President Emmanuel Macron.
The event will bring together leading startups, investors, entrepreneurs and technology stakeholders to explore opportunities for collaboration, investment and innovation-driven partnerships between India, France and the wider global ecosystem.
The interaction with investors comes as India and France seek to deepen cooperation in emerging technologies, innovation and entrepreneurship under their Special Global Strategic Partnership.
The Bharat Innovates Summit is expected to serve as a key platform for fostering cross-border investment and strengthening ties between startup ecosystems in the two countries.
Prime Minister Modi and President Macron are also expected to hold bilateral talks in Nice, where they will review the entire spectrum of India-France relations.
Discussions are likely to focus on innovation, technology, trade, defence cooperation and broader strategic issues, reflecting the expanding scope of engagement between the two nations.
PM Modi’s visit to France, which runs from June 13 to June 18, will cover three key cities — Nice, Evian and Paris.
Meanwhile, shortly after arriving in France, PM Modi shared glimpses of his interaction with members of the Indian community in Nice.
“A memorable welcome from the Indian community of Nice. Although they are several kilometers from their country, the bond of our diaspora with India remains stronger than ever,” Prime Minister Modi wrote on social media platform X.
Prior to that, upon arriving in Nice, the Prime Minister had shared details of his France visit in a post on X, saying that his engagements would span Nice, Evian and Paris.
“I have just landed in Nice. Beyond Nice, this visit to France includes programs in Evian and Paris,” PM Modi stated.
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